As previously reported, Gov. Andrew Cuomo in May empaneled a three-person wage board (the Board) to study and fix perceived wage inequality suffered by New York’s fast food workers – including by recommending whether, and by how much, to raise their minimum wage. Cuomo’s actions were a direct response to state lawmakers’ snub of his latest attempt to raise the minimum wage statewide (it is already slated to increase to $9/hour in 2016, but Cuomo had tried to raise it to $10.50/hour).

During several meetings held throughout the state earlier this summer, the Board heard extensive – mostly one-sided – testimony on the appropriate wage rate for fast food workers. The Board also expressed concern during the meetings about these workers’ unpredictable schedules, and it considered whether to set the pay rate for part-time workers higher than that for full-time workers, so as to incentivize employers to create more full-time jobs.

The Board’s Proposals

Finally, on July 22, the Board revealed its formal proposals, which the New York State Department of Labor (NYSDOL) is expected to adopt without hesitation.

From the business community’s standpoint, the only positive feature in the Board’s proposals is the absence of any recommendation regarding employee scheduling or distinct pay rates for part-time workers.

As many in the business community had feared, the Board proposes increasing the minimum wage rate for “fast food employees” to $15/hour – an increase to be phased in over three years for workers in New York City, and over five-and-a-half years throughout the rest of the state. The Board has also defined the seminal terms “fast food employee” and “fast food establishment” incredibly broadly:

  • A “fast food employee” is: “any person employed or permitted to work at or for a Fast Food Establishment by any employer where such person’s job duties include at least one of the following: customer service, cooking, food or drink preparation, delivery, security, stocking supplies or equipment, cleaning, or routine maintenance.”
  • A “fast food establishment” is: “any establishment in the state of New York serving food or drink items: (a) where patrons order or select items and pay before eating and such items may be consumed on the premises, taken out, or delivered to the customer’s location; (b) which offers limited service; (c) which is part of a chain; and (d) which is one of thirty (30) or more establishments nationally, including: (i) an integrated enterprise which owns or operates thirty (30) or more such establishments in the aggregate nationally; or (ii) an establishment operated pursuant to a Franchise where the Franchisor and the Franchisee(s) of such Franchisor owns or operate thirty (30) or more such establishments in the aggregate nationally.” (Emphasis added.)

Despite unanimous praise for the Board’s proposals by worker advocates, the business community is expected to challenge the legality of the proposals before implementation.

What Does this Mean for My Business?

Given the current political climate, the NYSDOL’s review of the wage Board’s proposals should be considered a mere formality, and the business community’s expected legal challenge to the proposals should have unlikely success. Entities impacted by the Board’s proposals should therefore view them as practically a sure thing. Coupled with the recommendation made earlier this year by a separate wage board – to increase the minimum wage for New York’s tipped workers from $5 to $7.50/hour – the Board’s proposals mean 2016 will be a year of great change for the restaurant industry. Prudent restauranteurs should start planning for the change now by consulting with counsel about their options – which may include reducing workers’ hours, cutting staff, and/or raising prices – to help offset the financial impact of the coming minimum wage hikes.